Bank of Hickory Flat v. Crawford

Ethridge, J., delivered the opinion of the court. The appellee, Crawford, and R. W. Allen gave the appellant bank a note for one hundred eighty-one dollars and fifty cents and the note becoming due and unpaid, and Allen having absconded, suit was brought against Craw [357] ford on this note in the justice of the peace court and appealed to the circuit court, where there was a judgment in favor of the appellee, Crawford, from which this appeal was prosecuted. It appears that the defense of Crawford is based upon a failure of the bank to have a deed of trust recorded which was executed by Allen conveying certain personal property in trust to secure the note sued on. It appears from the record that the bank had refused to take the deed of trust on the said personal property, but told Allen that if he would get Mr. Crawford to sign the note with him that the bank would let him have the money. Allen sought Mr. Crawford to get him to sign the note; Mr. Crawford did so, a deed of trust being taken on the property mentioned in the deed of trust, and said deed of trust was left with the bank with the note. The bank failed to have this deed of trust recorded, and Allen subsequently gave a second deed of trust on the property, which said deed of trust was duly recorded, and default having been made on the second deed of trust, the holder thereof advertised the said property for sale. Thereupon Mr. Crawford went to the bank and on inquiry found the deed of trust had not been recorded and there was nothing left out of the proceeds of the sale under the second deed of trust to pay the note here sued on. There was a difference between Mr. Crawford and the cashier of the bank as to whether the deed of trust was taken for the benefit of the bank, or whether it was taken for the security of Crawford; the cashier testifying that the bank did not accept the deed of trust and that it was filed with Mr. Crawford’s papers at the bank and that it was his deed of trust and that Mr. Crawford did not request it to be recorded, that it was Mr. Crawford’s duty to see that said deed of trust was recorded; the contention of Mr. Crawford being that the deed of trust was taken as security and filed with the bank, and that it was through the bank’s negligence in this respect that the property was lost and the rights of the defendant prejudiced, and that he (Crawford) was there [358] by released from his obligation as a signer of the note because of such negligence and default on the part of the bank. . The bank requested a peremptory instruction which was refused and which constitutes one of the assignments of error. It is the settled law of this state that mere nonaction by the creditor in resorting to the property of the principal debtor for failing to' take some action which would impress a charge upon the property of the debtor does not release the surety. In Pickens v. Finney, 12 Smedes & M. 468, it was held that forbearance or mere passiveness on the part of the creditor will not release the surety. In that case the creditor had obtained £ judgment against Cook for four hundred fifty dollars debt, and two hundred two dollars damages; an execution on which was bonded with complainant as surety, and the bond forfeited on the 20th of October, 1845, at which time Cook had property ifi his possession sufficient to have paid this judgment, and all of an older date, and had Finney enrolled his judgment so as to have preserved the lien, the money thereon could have been made out of the property of Cook; but by omitting to do so Finney gave younger judgments, a list, of which was set out in the bill, priority of lien, and all of Cook’s property was taken by executions on them, and sold for more than enough to pay Finney’s judgment and all older judgments. The court held that the failure to enroll the judgment and thus preserve the lien did not release the surety. In the case of Johnson v. Planter’s Bank, 4 Smedes & M. 171, 43 Am. Dec. 480, it was held that if a creditor who holds a note against a principal and sureties fails after the death of the principal to present it to the administrator within the time prescribed by law, the sureties are not thereby discharged. Various other applications of the doctrine have been made in the decisions of this court. See Caruthers v. Dean, 11 Smedes & M. 178; McMullen v. Hinkle, 39 Miss. 142; Clopton v. Spratt, 52 Miss. 251; Wright v. Watt, 52 Miss. 634; Johnson v Machinery Co., 104 Miss. 217, 61 So. 178, 62 So. 4. [359] The authorities in other states are divided upon the proposition as to whether neglect to file an instrument for record will operate to release a surety as will be shown by case note to First National Bank v. Kittle, 37 L. R. A. (N. S.) 699 (W. Va.), in which case note Mississippi is lined up with the doctrine that the failure to file for record does not release the surety. On the facts in this record we think the peremptory for appellant should have been given, and it is unnecessary to decide the other questions presented. The judgment will be reversed, and judgment rendered here for the appellant. Reversed and judgment here for appellant.